THE UK’s largest listed companies should disregard the accounting advice of reporting watchdog the FRC, a group of investors have urged chairmen of FTSE 350 businesses.

The Local Authority Pension Fund Forum (LAPFF), whose 71 members have £175bn in assets, has written to the chairman of the FTSE 350 companies and urged them to disregard the FRC’s advice over the application of defective accounting standards.

LAPFF claims that documents released by the former Department for Business, Innovation and Skills (BIS) under the Freedom of Information Act undermine the FRC’s claim that its interpretation of the law on true and fair is backed by government.

“LAPFF believes that the FRC has been doing its job badly because it’s been reading the law wrongly. What matters to investors is that companies do the right thing,” said Kieran Quinn chair of LAPFF. “We have had to make clear that the FOI reveals that the government did not agree with the FRC position.”

The FRC has repeatedly dismissed claims that international accounting standards conflict with UK company law as misguided by UK policymakers, and suggested that government agreed with legal advice taken by the FRC from company law counsel Martin Moore QC.

Moore found that IFRS is legally binding and achieves a true and fair view in financial statements and could, in most instances, be achieved by complying with the rules

“We were surprised by FRC claims that the government agreed that LAPFF and Mr Bompas was wrong. The FOI reveals that it didn’t. It’s time the FRC did its job properly by regulating in accordance with the law,” said Quinn.

In a statement, the FRC said: “The FRC discusses policy issues on a regular basis with central government as this FOI response shows.

“Our position on this issue is clear: the Companies Act 2006 does not require the separate disclosure of a figure for distributable profits. Ultimately interpretation of the Act is a matter for the courts.

“The FRC stands by what it has previously said on this matter. It was aware that the LAPFF had written to company chairmen in late 2015. Their letter dealt with a very narrow point of company law in terms which we cannot support and which raises uncertainty unnecessarily. The LAPFF’s new letter is drawing on emails regarding a draft statement. The final version of the statement was agreed with BIS.”